The Department of Justice is investigating Apple’s practices in the digital music market, according to reports in The New York Times and The Wall Street Journal. Apple has not publicly commented on the formal examination.
The Times cited “people briefed on the conversations” in its report that revealed Justice staff members have talked to major music labels and Internet music companies. The antitrust inquiry, which is zeroing in on how Apple sells music online, is reportedly still in its infancy.
“Apple is hardly a monopoly in the music industry. There are plenty of places people can go to get their music,” said Michael Gartenberg, a partner at Altimeter Group. “So the question is — and what will be investigated — is whether or not Apple in its position in the industry did something that ran afoul of the law.”
Did Amazon Cry Foul?
One specific accusation against the iPod maker is that the company used its dominant market position to compel music labels to turn down requests from Amazon.com for exclusive rights to sell soon-to-be-released music.
Billboard magazine reported in March that Amazon was seeking first dibs on songs a day before their official release. Amazon planned to promote those songs as a MP3 Daily Deal on its web site. Billboard also reported that Apple penalized music labels that agreed to Amazon’s terms by nixing marketing efforts for those songs on iTunes.
Did Amazon cry foul? Although Amazon is a force to be reckoned with in e-commerce, Apple remains the king of the hill in the online music category. According to NPD Group, Apple holds 69 percent of that market. Amazon is a far-and-away distant second with a mere eight percent market share.
“Apple is not the scrappy underdog anymore. It’s a powerful force in the industry. You can’t get to that position without making some enemies…